Walking Down the Aisle Comes With Financial Perks

Categories Blog, Estate Planning, Inheritance Tax, Wills

Retirement and tax benefits are perhaps the last thing one would consider when deciding to get married, but those who choose to marry (or enter into a civil partnership) and stay together can enjoy significant tax gains.

While marriage might not be the right choice for everyone and a painful divorce can be very damaging, tying the knot could save you and your family considerable sums in the long term, financial experts claim.

Married couples can more easily maximise tax benefits related to death duties, Income and Capital Gains Tax and pensions compared to the four million plus cohabiting couples, Mike Warburton from assurance and taxation specialist Grant Thornton told the Daily Telegraph.

Inheritance Tax (IHT) is a major liability for cohabiting couples with combined assets above £650,000 as they face an IHT charge of forty percent on any asset above the IHT threshold of £325,000 when one partner dies.  On the other hand, a husband or wife is allowed to "inherit" their deceased partner's tax-free amount or Nil Rate Band, which means married couples could pass on £650,000 free of death duties, while unmarried partners can only leave £325,000 tax-free.

Making a Will is a key factor in the tax planning process for all couples, but it is particularly important for unmarried couples.  In this circumstance, if there is no Will the surviving unmarried partner will not automatically inherit anything from their deceased partner's property even if the cohabitees had children and lived together for a long time.

Widowed spouses and registered civil partners are also entitled to state bereavement benefits, which cohabiting partners are not eligible for. The government pays bereavement allowance for 52 weeks after death to widowed spouses if they are above 45 years of age but below the state pension age when their partner dies. Weekly payments are up to £31.79 for 45-year-old widowed spouses and up to £105.95 for those aged between 55 and 65.